While the objective of proxying for global trends in credit markets is laudable, the diagnostics of model performance in- and out-of-sample overstate the model’s reliability. The major difficulty is that the independent and dependent variables, while stationary, are highly persistent. The high reported R2’s (ranging from 61% to 83% on 1300 daily observations over 1988-92) are therefore to be expected, while good out-of-sample forecasting performance over 1993 is also to be expected for highly persistent variables. Dickey-Fuller tests for stationarity of in-sample residuals are also run — the standard Engle-Granger test for cointegrated variables — but since the variables are stationary the relevance of this test is not apparent.

It does appear that the global variables used in assessing Morgan’s non-EMU scenario contain some information for post-1992 swap spreads. In particular, several countries experienced temporary declines in swap spreads relative to Germany over 1992-94, and again after 1995 (see Figure 3) that are in part correlated with Morgan s estimated non-EMU swap spreads.14 Overall, the regression approach appears somewhat preferable to just using average spreads over some interval as an estimate of the non-EMU scenario.15 Nevertheless, it must be recognized that the non-EMU estimate potentially contains considerable structural instabilities that could affect EMU probability inferences. People need payday loans like speedy cash because they all need money at some point. If you arrived at this point, you probably need a loan with low APR and fair terms that you can be sure about. You are welcome to visit website to get a loan like this, and we can guarantee you will not be sorry about this decision.

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